Optimization of a Stochastic Reverse Logistics Network with Refurbishment and Exchange Options
24 Pages Posted: 12 Feb 2011
Date Written: February 2011
Abstract
Remanufacturing activities are gaining momentum in the manufacturing industry. Therefore, the need for optimized networks becomes more pressing. In this paper we take a profit maximization approach to simultaneously determine the optimal network and the delivery strategy to support remanufacturing services offered to customers.
In order to set up a network, investment decisions have to be made concerning the number, locations and types of remanufacturing facilities. Additionally, appropriate capacity and inventory levels have to be set in order to guarantee a given service level. These network decisions are influenced by the way the remanufacturing services are offered by the manufacturing firm. We consider two possible service delivery strategies: the service provider can either make a quick exchange of the used part by a refurbished one or re-install the original part after remanufacturing it.
The model described in this paper is applied to optimize the network and service delivery strategy at a worldwide manufacturer of construction, mining and industrial equipment.
Keywords: Network Design, Queueing Networks, Remanufacturing, Contracting
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